Selfish Shareholders: Corporate Donations during COVID-19
Sciences Po Economics Discussion Papers
Paris : Département d'économie de Sciences Po
Sciences Po Economics Discussion Papers : 2021-01
Shareholder influence, Corporate decisions, Charitable donations, COVID-19
During the onset of the COVID-19 pandemic, conflicting incentives caused most shareholders to adverse corporate social responsibility (CSR) –measured by firms’ charitable donations– since it would further burden firms’ already strained finances. Those shareholders that favored donations, large individual investors, did so to bolster their own images as they are typically synonymous with the donating firms. Image gains do not pass through to institutional shareholders, who instead preferred to donate themselves rather than having the firms they invested in donate. Taken together, our results cast doubts on large corporations’ willingness to demand costly CSR measures across firms in their portfolios.